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Tax Tips – Understanding the New “No Tax on Overtime” and “No Tax on Tips” Policies

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Tax Tips
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Key Changes in Tax Rules for Overtime Pay and Tips – Tax Tips

The One Big Beautiful Bill Act (OBBBA) has introduced significant tax reforms, fulfilling two of President Trump’s key campaign promises: no tax on overtime and no tax on tips. These changes impact both employees and business owners, offering new deductions that could lead to substantial savings.

Tax Tips
Tax Tips

If you’re wondering how these tax changes affect you—whether as a worker earning overtime or tips, or as an employer managing payroll—this guide breaks down everything you need to know.


No Tax on Overtime: What You Need to Know -Tax Tips

1. Deduction Details

  • Retroactive to January 2025, the OBBBA allows employees to claim an above-the-line tax deduction on qualified overtime pay.
  • Single filers can deduct up to $12,500, while joint filers can deduct up to $25,000.
  • The deduction phases out for individuals earning over $150,000 (or $300,000 for joint filers).
  • No itemization required—this deduction is available even if you take the standard deduction.

2. What Qualifies as Tax-Free Overtime?

  • Only overtime wages exceeding the normal pay rate are eligible.
    • Example: If your regular wage is $20/hour and overtime is $30/hour, you can deduct the extra $10/hour.
  • Overtime must be paid under Section 7 of the Fair Labor Standards Act (FLSA)—meaning it applies only to employees working more than 40 hours per week.
  • Overtime paid under contractual agreements or state laws only qualifies if it meets FLSA standards.

3. Payroll and Reporting Requirements

  • Employers must track and report qualified overtime wages separately on Form W-2.
  • A transition rule for 2025 allows employers to estimate overtime wages using a “reasonable method” until the IRS provides further guidance.
  • Important Note: Overtime pay is still subject to payroll taxes (Social Security and Medicare).

4. Temporary Benefit

This deduction is only available until 2028, so employees should maximize savings while it lasts.

Tax Tips
Tax Tips

No Tax on Tips: How It Works

1. Deduction Overview

  • Retroactive to 2025, tipped workers can claim an above-the-line deduction of up to $25,000.
  • The deduction phases out for those earning over $150,000 (or $300,000 for joint filers).
  • Like the overtime deduction, no itemization is required.

2. Who Qualifies?

  • Workers in occupations that customarily receive tips (e.g., servers, bartenders, home service professionals).
  • The Treasury Department will publish a list of qualifying jobs by early October 2024.
  • Tips must be voluntary—mandatory service charges don’t count.

3. Exclusions to Be Aware Of

Employees in Specified Service Trades or Businesses (SSTBs) cannot claim this deduction. SSTBs include:

  • Accounting, law, healthcare, consulting
  • Financial services, brokerage, performing arts
  • Businesses where the primary asset is the reputation or skill of the owner/employee

4. Reporting Tips Correctly

  • Tips must be reported on Form W-2.
  • A transition rule allows flexibility in reporting for 2025.
  • Note: Tips are still subject to payroll taxes (Social Security and Medicare).

5. Temporary Benefit

This deduction also expires after 2028, so workers should take advantage while it’s available.

Tax Tips
Tax Tips

How Employers Should Prepare

1. For Overtime Pay

  • Work with payroll providers or accountants to ensure proper tracking of eligible overtime.
  • Update payroll systems to separately report qualified overtime wages on W-2 forms.

2. For Tipped Employees

  • Identify which employees regularly receive tips.
  • Ensure tips are voluntary (not mandatory service charges).
  • Monitor IRS updates for the official list of qualifying occupations.

Key Takeaways for Workers and Businesses

Overtime Deduction: Up to $12,500 (single) / $25,000 (joint) for eligible overtime pay.
Tips Deduction: Up to $25,000 for workers in tip-heavy industries.
⚠️ Income Limits: Deductions phase out above $150,000 (single) / $300,000 (joint).
⚠️ Temporary Benefit: Both deductions expire after 2028.
📌 Payroll Taxes Still Apply: Overtime and tips remain subject to Social Security & Medicare taxes.


Final Thoughts: Maximizing Your Tax Savings

These new tax rules provide valuable savings opportunities for workers earning overtime or tips. However, the deductions are time-limited, so it’s crucial to:

  • Track eligible overtime hours carefully.
  • Report tips accurately to avoid IRS issues.
  • Consult a tax professional to ensure compliance and maximize benefits.

For business owners, staying updated on IRS guidance and adjusting payroll systems will be key to smooth implementation.


Need Help with Tax Tips? Consult a Professional!

This article provides general information—always consult a tax advisor or accountant for personalized advice based on your financial situation.

By understanding these new policies, you can keep more of your hard-earned money and avoid surprises at tax time. Stay informed and plan ahead!

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NBC Sports Revolution: 15 MLB Games Today

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The Ultimate Baseball Marathon

The day’s schedule is packed with wall-to-wall coverage, ensuring you don’t miss a single pitch from your favorite franchise. The action began at noon ET on NBC with an NL East showdown between the New York Mets and the Atlanta Braves. Later tonight, the primetime slot on NBC at 7:00 p.m. ET features a blockbuster matchup: the Los Angeles Dodgers hosting the San Diego Padres.

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nbc

Between those marquee games, Peacock is hosting a marathon of 13 additional games. For those who want to track multiple storylines at once, Peacock is offering an “MLB Multiview” feature, allowing viewers to stream up to four games simultaneously on their devices—a perfect tool for fantasy players and die-hard enthusiasts alike.

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nbc

Why This Matters for Sports Fans

This isn’t just about watching games; it’s about the evolution of how we consume sports. In an era where fragmentation often makes it difficult to find a game on cable, having the entire league under one “roof” is a refreshing change. Whether you are rooting for a pennant race contender or just want to catch a glimpse of the league’s top prospects, today provides an unparalleled window into the world of Major League Baseball.

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nbc

As you enjoy the games, consider the effort behind the scenes. Rob Hyland, NBC Sports SVP of Production, noted that this event required months of collaboration between local production teams and MLB. It’s a bold experiment in “competitive” broadcasting, ensuring that the 250th birthday weekend of the nation is marked by the sport that defines its summers.

How to Watch

To catch all the action, ensure you have your Peacock subscription ready. While the two featured games are available over the air on NBC, the vast majority of the day’s content lives on the Peacock streaming platform. So, grab your snacks, kick back, and enjoy the biggest baseball broadcast event in television history.

nbc
nbc

In a monumental shift for American sports broadcasting, baseball fans are witnessing a historic day. For the first time, a single media network is bringing the entire Major League Baseball slate to your living room. Today, all 30 MLB teams are in action, with every single game airing across NBC and Peacock.

This event, dubbed “Star-Spangled Sunday,” marks a massive technical and logistical undertaking, mirroring the scale usually reserved for the Olympic Games. It is a dream scenario for fans who want to immerse themselves in the national pastime for the entire day.

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Trump Mount Rushmore Dream: 1 Hard Truth Revealed

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The “Dream” Meets Structural Reality

As President Donald Trump (Trump Mount Rushmore) makes his way to South Dakota this Friday, the nation’s eyes are once again fixed on the iconic granite peaks of Mount Rushmore. Amidst the pomp and circumstance of the country’s 250th anniversary, the perennial question has resurfaced: Is it time for a fifth face to join the monument? While the idea remains a favorite talking point for his staunchest allies, the reality is far more solid—and less yielding—than political rhetoric suggests.

Trump mount rushmore
Trump mount rushmore

For years, President Trump has toyed with the concept of his likeness being carved into the Black Hills. From joking comments at rallies to sharing digital mock-ups on his social media platforms, the president has made no secret that he finds the idea appealing. In a private meeting during his first term, he famously told then-Governor Kristi Noem that it was his “dream” to be featured alongside Washington, Jefferson, Roosevelt, and Lincoln.

Trump mount rushmore
Trump mount rushmore

However, the “mountain” he needs to move is not political; it is literal. According to engineers and the National Park Service, there is simply no remaining surface area to accommodate another sculpture. Sculptor Gutzon Borglum, who oversaw the original project, noted as early as 1936 that the composition was “fixed” and that the stone lacked the structural integrity to support further expansion.

Trump mount rushmore
Trump mount rushmore

Stalled Legislation and Political Friction

Despite these warnings, the push to memorialize the 45th and 47th President continues in Washington. In early 2025, Rep. Anna Paulina Luna introduced legislation to mandate the carving, arguing it would “reflect his towering legacy.” The bill remains firmly stalled, lacking the bipartisan support necessary to clear the Senate.

While some members of his administration, including Interior Secretary Doug Burgum, have publicly suggested there is “certainly” room for his face, these statements clash with the long-standing assessment of park officials. Critics argue that the focus on such projects is a distraction from more pressing national issues, while supporters see it as a fitting tribute to a leader who has sought to reshape American architectural and cultural identity.

A Different Climate in 2026

President Trump’s return to the memorial comes six years after his contentious 2020 visit. That event, held during the height of the global pandemic and national unrest following the death of George Floyd, was marked by a defiant speech against “cancel culture.”

Trump mount rushmore
Trump mount rushmore

This year’s visit is focused on the Freedom 250 celebrations. Unlike the 2020 event, which took place during a moment of profound national crisis, this visit is aimed at celebrating the nation’s 250th birthday. Thousands of attendees are expected, though security remains tight and a designated area has been set aside for protesters near the town of Keystone, reflecting the ongoing political divide that persists even during historic milestones.

Whether or not the President ever finds his place on that granite cliffside, his imprint on the American political landscape is undeniable. For now, the mountain stands as it has for nearly a century: a testament to a bygone era of American expansionism, largely unchanged by the shifting tides of modern politics.

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Alan Greenspan: Iconic Fed Leader Dies at 100

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Alan Greenspan
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A Legacy of Power and Turbulence

Alan Greenspan, the legendary economist who served as the chairman of the Federal Reserve for nearly two decades, has passed away at the age of 100. His death was confirmed on Monday by his wife, renowned NBC News correspondent Andrea Mitchell.

Alan Greenspan
Alan Greenspan

Mitchell, who was married to Greenspan for 29 years, shared a poignant statement confirming that he died at their home due to complications from Parkinson’s disease. “He was a giant of a man who helped shape the U.S. economy for decades under presidents of both parties, but was always honest in acknowledging his mistakes,” Mitchell said.

Serving five terms as the Fed chair under four different presidents—Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush—Greenspan’s influence on the global financial landscape was unparalleled. Often referred to as “The Maestro,” he was widely credited with overseeing one of the most prosperous periods in American history, including the longest economic expansion from 1991 to 2001.

Alan Greenspan
Alan Greenspan

Born on March 6, 1926, in New York City, Greenspan’s journey began with a passion for music. A graduate of the Juilliard School, he spent time as a professional jazz musician before pivoting to economics at New York University. His early association with philosopher Ayn Rand profoundly shaped his views on laissez-faire capitalism, a philosophy that would later influence his tenure as a policymaker.

Greenspan took the helm of the Fed in 1987, shortly before the infamous “Black Monday” market crash. His swift, decisive actions to provide liquidity to the markets during that crisis helped cement his reputation as a steady hand. Throughout the 90s and early 2000s, his ability to manage interest rates became legendary, with investors and politicians alike watching his every word to forecast market moves.

Alan Greenspan
Alan Greenspan

However, his legacy is not without significant controversy. Critics often point to his advocacy for financial deregulation as a contributing factor to the 2008 global financial crisis. Greenspan himself later acknowledged the complexity of the economic landscape, referring to the crisis as a “once-in-a-century credit tsunami.”

Despite these challenges, he remained a fixture of American public life, advising presidents and maintaining a unique reputation as the world’s most powerful central banker. Beyond the boardroom, he was a man of varied interests, ranging from his love for the Washington Commanders to his deep appreciation for jazz music.

Alan Greenspan
Alan Greenspan

“To me he was my husband, who shaped my life from our very first date in 1984,” Mitchell added. “He will be remembered for his brilliance and his kindness. Being his life partner was the joy of my life.”

Alan Greenspan
Alan Greenspan

As the world reflects on his century-long life, the financial community remembers a man who defined the American economy for a generation.

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